The Eroding Profitability of Hedge Funds

On Monday I shall be taking part in a debate on this topic on Monday evening in NY with my friend Peter Fell, from Kenmar, at The Harvard Club. I am looking forward to the opportunity to discuss with other investors how hedge fund clients might improve upon the frankly abysmal results that the industry has delivered. Fees, lack of transparency, gates and other elements all combine to ensure that whatever profits hedge funds generate are taken up in fees.

Investors deserve far better than they have received, and I’m looking forward to an entertaining and lively discussion.

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3 replies
  1. Jonathan Smith
    Jonathan Smith says:

    As reported by (4/20/2012) 18% of North Carolina’s $3.5 bln of the NC pension system had invested in alternatives – which was in the hands of eight local and state money managers in mid-2011. Six of 17 alt funds were purported to meet the pension fund’s benchmarks in the alternative space. Sounds like an accident looking for a place to happen.

  2. John Chandler (@JohnChandlerEdm)
    John Chandler (@JohnChandlerEdm) says:

    Do you agree that there’s a math error in your book?

    The claim has been made here as follows:

    “An investor puts $1 million in a fund that has a +50% return, he adds another $1 million, the fund then has a -40% return. Net, the investor has lost 25% of his money. The fund will report a compound average annual growth rate of negative 5.13%. [ ….] the author makes the claim that the fund will report a positive 5.13% compounded annual return: a math error that fuels a couple of pages of rant about funds making money when investors lose.


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